Verified bystander footage distributed by the German news agency dpa showed the suspect's arrest on a walkway in the middle of the road. A nearby police officer pointing a handgun at the man shouted at him as he lay prone. Other officers soon arrived to take the man into custody.
The two people confirmed dead were an adult and a toddler, but officials said additional deaths could not be ruled out because 15 people had been seriously injured.
The violence shocked the city, bringing its mayor to the verge of tears and marring a festive event that is part of a centuries-old German tradition.
The suspect is a 50-year-old Saudi doctor who moved to Germany in 2006, Tamara Zieschang, the interior minister for the state of Saxony-Anhalt, said at a news conference. He has been practising medicine in Bernburg, about 40 kilometres (25 miles) south of Magdeburg, she said.
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